Economics 100C

Intermediate Economic Theory

Spring Term,  2010

Welcome to the Economics 100C Website. Here you will find the course syllabus, a schedule of lessons, homework and examinations, and some bits of advice. Students in this class  will be expected to check this site regularly.  We will routinely use this site for posting announcements and homework assignments.
 

 

Instructor:          Ted Bergstrom 

Office:  North Hall 2052 

Office Hours:   Weds 1:30-3:30 and by appointment.

Email: tedb@econ.ucsb.edu

Announcements:

Please note the change in scheduled office hours.  Turns out I have a conflict at the time posted earlier.

Answers to Problems on First Midterm

Answers to Problems 1 and 2 from Second Midterm

April 29.  Today I  posted some  lecture notes detailing calculations of equilibrium in a land assembly problem.

June 1.  Here is a pair of practice problems, one concerns equilibrium in bilinguilism and the other concerns
patent rights and an anticommons
  Two Practice Problems
Answers to Practice Problems

Graph of study hours from classroom survey

June 4.  I have added answers to some more of the problems from the Kreps book.
You will find them here  and here.

Final Exam...You don't need to bring a blue book to the exam.  You may bring a calculator.

If you are thinking about things to do after graduation, you might be interested in   this message which I recently received.
Thinking of graduate school in economics?  Here is a useful site. And do feel free to come and chat with me about
this or any other career option that you are considering.

Course Introduction

This is a sequel to Economics 100A and 100B.   In this course, we   build on things you learned in 100A and 100B.  The only textbook material  that we will use  are chapters from Varian's Intermediate Microeconomics and Bergstrom and Varian's Workouts.   The Web readings  include articles from economics journals and material from a variety of other sources.   

You will be required to bring an  i>clicker to class.  These are the same clickers that you used for 100A and100B.  If you don't already have one, they are available for purchase at the campus bookstore for $37.50.   If you haven't already done so, you will need to register your i>clicker at the following website.  www.i>clicker.com/registration.

Course grades will be assigned on the following basis.
Participation and in-class quizzes 20%.
First Midterm 20%
Second Midterm 20%
Final Exam 40%.

Is this the course for you?

If you did not do well in Economics 100A and 100B, this is not the course for you!  This course builds on the material that was taught in 100A and 100B and is intended to be more challenging than either of these courses.  There are regular assigned readings and frequent homework and in-class quizzes.   You will be expected to come to class and to have done the assigned reading before you come to class.  I will take attendance and will call on people regularly. 

If you are willing and able to put in the effort to read the assigned material, to work the assigned homework problems, and to show up in class having done your assignments, I hope that you will find the course stimulating and enjoyable.  

Approximate Class Schedule

Think of this as a forecast--like the weather report.  It is fairly accurate for the short term, but  we will reserve  flexibility to make changes in the the schedule in response to the march of events.
  
Unit 1--Auctions

March 30 
Introduction and classroom auction experiments

April 1--Private Values and Common Value Auctions
Readings and Homework.
Please read these materials before coming to class on Thursday and be prepared to discuss your readings in class.
    Varian: Intermediate Microeconomics Ch. 17, Auctions
    Steve Matthews: A Technical Primer on Auction Theory:  Sections 1 and 2 (Click here for link)
   
 Work the following problems from Workouts in Intermediate Microeconomics
    Chapter 17: Auctions Problems 1-3

April 6--Auction Design
Please read these materials before coming to class and be prepared to discuss your readings in class.
 
Steve Matthews:  A Technical Primer on Auction Theory:  Section 3
  Dio:  
Praetorian Guards Auction the Roman Empire (Click here for link)
  Ken Binmore and Paul Klemperer:  The Biggest Auction Ever
  Paul Klemperer:  How (Not) to Run Auctions
 Ted Bergstrom Lecture Notes on Revenue Equivalence

 Work the following problems from Workouts in Intermediate Microeconomics
    Chapter 17: Auctions Problems 5,6,7

April 8

Please read these materials before coming to class and be prepared to discuss your readings in class.
Freakonomics All Pay auction
Check out these auction rules: (I don't recommend participation)
 
Here are some power point slides from today's lecture.

A sad story of a legal battle

Work the following problems from Workouts in Intermediate Microeconomics
    Chapter 17: Auctions Problems 8,9,10

Please listen to the following  recorded lecture delivered by Professor Polak at Yale.
Benjamin Polak Lecture on Auctions and the Winner's Curse


April 13 (First Midterm)

Unit 2--The tragedy of the commons

April 15

Please read these materials before coming to class and be prepared to discuss your readings in class.
Garrett Hardin:   The Tragedy of the Commons
Scott Gordon:     The Economic Theory of a Common-Property Resource: The Fishery

April 20

Class notes on Gordon's Fishery Model

Elinor Ostrom:   
Governing the Commons, pp 58-92

April 22
Please read the  Demsetz article before coming to class. 
Harold Demsetz:    Towards a Theory of Property Rights
Elinor Ostrom and Edella Schlager  Property-rights regimes and natural resources,  Land Economics,  68:3, 199, 249-262
Property rights and California Native Americans

Unit 3--The tragedy of the anticommons

April 27

Please read this material  before coming to class and be prepared to discuss your readings in class.
During the first 5 minutes of class, I will ask you to supply a written answer to a question based on a reading of this
article.
Michael Heller: The Tragedy of the Anticommons

Lecture notes on Anticommons

April 29
Please read these materials before coming to class and be prepared to discuss your readings in class.
During the first 5 minutes of class, I will ask you to supply a written answer to a question based on one of these articles.

Roy Gardner and Noel Gaston:  Tolling the Rhine in 1254: A Complementary Monopoly Revisited
James Buchanan and Yong Yoon:  Symmetric Tragedies: Commons and Anticommons

Additional suggested reading:  Excerpts from book The Gridlock Economy,  by Michael Heller

May 4 (Second Midterm)

Unit 4--Information Economics

May 6
 
Please read the following paper before coming to class and be prepared to discuss your readings in class.
The Market for "Lemons"--George Akerlof

Lemons Experiment.  This is a description of our lemons experiment and the related theory.  

May  11
Please read the following materials before coming to class and be prepared to discuss your readings in class.

Chapter 37 from Varian's Intermediate Microeconomics.
Class Lecture Notes 
You can open these in your web browser.

Review material.  In this lecture and in later lectures,  we will be using some of the material on expected utility that you covered in  Econ 100A-B, see especially pp 220-227 of  Varian's chapter 12 on Uncertainty,
 
May 13
Please read the following materials before coming to class and be prepared to discuss your readings in class. During the first 5 minutes of class, I will ask you to supply a written answer to a question based on one of this article.
Job Market Signaling--Michael Spence

Be sure that you are able to do the following problems.
Problem set on asymmetric information  from Workouts in Intermediate Microeconomics.
Before you try to do these problems, you need to read the chapter on Asymmetric Information in the Varian text.  (Answers to even-numbered problems are found in back of Workouts.)
 

May 18
Please read the following materials before coming to class and be prepared to discuss your readings in class.
Leisure College by Philip Babcock and Mindy Marks
Does College Education Still Pay?  by Lisa Barrow and Cecilia Rouse
Statistics on average starting salary and midcareer salary by college major
Another set of statistics on average salary by major

Graph of study hours from classroom survey

A website about  Signalling in the biological world
 

May 20

Hidden Information, Signalling, and Screening   from Microeconomics for Managers by David Kreps
Work Problems 1 and 2 from  Hidden Information, Signalling, and Screening  in the Kreps book..
(We will discuss these problems in class, but I want you to take a crack at them before we meet.

In preparation for this reading,  you may want to brush up on expected utility theory.  Read pp 220-227
in
Varian's Intermediate Microeconomics.

May 25
Read the chapter Incentives from Microeconomics for Managers by David Kreps
Work problem 18.2 from the Hidden Information, Signalling and Screening chapter of the Kreps book
and Problem 19.2 from this chapter and hand them in at the beginning of this class meeting.

Here are answers for Kreps Problem 18.1, 18.2, and 19.2
and here is a spreadsheet that produces answers to 18.1f
Answers to Kreps Problem 19.3

Unit 5--Information Technology

May 27 

Varian Intermediate Microeconomics pp 658-668

 Circulating Libraries and Video Rental Stores-- H. Varian and R. Roehl

Bilingualism and Network externalities
, Jeffrey Church and Ian King

Here are some related problems from Workouts

When was the fax machine invented?  (For those who are curious)

June 1

Against Intellectual Monopoly by Michele Boldrin and David Levine, Chapters 1, 2 and 3
You may find it interesting to look at other material at the website for this
book, especially the  Against Monopoly Blog.  David Levine's webpage has quite a lot of other interesting stuff as well.


 Intellectual Property, Competition, and Information Technology  M. Farrell and C. Shapiro

I have posted two practice problems in the announcements section above.

June 3

The Magic Cauldron  by Eric Raymond.  If you are curious about Mr. Raymond's other writings, you could check out his website.